tv Nightly Business Report PBS November 21, 2012 6:30pm-7:00pm PST
>> this is n.b.r. >> tom: i'm tom hudson. earlier than ever thanksgiving store openings have workers speaking out, how black friday sales starting on thanksgiving day are affecting labor relations. >> susie: i'm susie gharib. more than three million travelers are flying to get their turkey dinners this year, we have an update on holiday travel. >> tom: and two of the taxes scheduled to go up if we go over the fiscal cliff will hit investors. we ask the c.e.o. of utility next era energy lew hay about higher taxes on dividends and stock gains. >> susie: that and more tonight on "n.b.r."!
black friday comes early this year. all across the country americans are already lining up outside stores, camping out for the earlier-than-ever start to the holiday shopping season. scenes like this are popping up in shopping mall parking lots. these tents are pitched outside a best buy in tampa, florida, where shoppers are hoping to get the early-bird holiday specials. with big retail chains opening their doors for black friday, on thursday night, there are complaints about companies putting commerce ahead of family time. walmart has been threatened with protests by its employees. the company filed a complaint with the national labor relations board hoping to stop the demonstrations, but the board won't rule on it before tomorrow. diane eastabrook looks at the personal price of thanksgiving day store hours. >> reporter: this is the calm before the storm at a chicago toys r us. manager danny soro thinks up to 10,000 shoppers will descend on the store when it opens thanksgiving evening, forcing his 300 employees to cut short
their holiday. >> we open at 8:00 and we're expecting lines to start from 5 pm to go pretty much throughout the plaza. >> reporter: walmart, kmart, and sears are also opening tomorrow at 8pm; target's opening at 9:00pm. and while opening on turkey day is expected to mean big business for retailers, it's ruffling the feathers of many employees who won't get paid overtime to work the holiday. >> i feel very frustrated about this situation. >> reporter: walmart associate charmaine givens is scheduled to work two eight hour shifts with a three hour break starting tomorrow at 7 pm. >> i'm not gonna do that, no. >> reporter: you're just not going to show up? >> i'm going to call in. i'm gonna call in. i'm not going to just abandon the job. i'm gonna call in and i'm gonna state how i feel. >> reporter: givens hopes to join other walmart employees around the country in a protest outside the chain on friday. pro-labor groups are supporting the workers with online petitions.
so far change.org has collected roughly 370,000 signatures protesting target' early opening. sign-on.org has collected 35,000 signatures protesting walmart. labor expert robert bruno calls the outcry a gift to unions who've been trying unsuccessfully for years to organize big retailers. >> it's precisely that kind of indifference to the schedule of workers and worker families that will generate an enhanced grievance amongst those workers and it will start to give them additional reason to think we need a contract here. >> consumers will likely determine whether these early opens become a tradition or just a one-year fad. experts say if they don't turn out in mass to shop on thanksgiving big retailers may go back to their early black friday openings, but if shoppers do more retailers will jump on the band wagon next year.
diane eastabrook, "n.b.r.," chicago. >> susie: our next guest says technology is changing the face of "black friday". he's anthony pappas, president of his own firm, pappas group, a brand and advertising agency. >> susie: so, anthony, you say that black friday isn't the one day big event in retailing that it used to be? >> well, it is definitely changing. we're definitely seeing a shift that it actually goes through the weekend, and it seems to be kind of kicking off the season of buying. especially through the use of technology, being in stores is not necessarily the only way to get those deals and to get the benefits and the perks. >> susie: and that's exactly the point. now consumers are going in with their smartphone and with their tablets, and, of course, they have computers. how is that changing the whole shopping experience? and, also, how are retailers adapting to this? >> consumers are really looking for convenience. they're looking for ease
of use. a lot of people want to avoid the crowds. you see retailers basically build mobile apps and other technologies that allow that experience to happen seamlessly. for instance, apple's apple store app that you can download, basically allows you to buy, purchase, pick up in store if you wish, basically wherever you are, or have it shipped to you from any location. so things like that allow you to do a lot more just by standing in any sort of region or any place you want. i think the other thing is that stores are also looking to, you know, offer free wi-fi in case you want to bring in your devices and sort of have it aid in your experience in store. they're not neglecting the fact that technology is there, but they're sort of saying it is a seamless shopping experience overall. >> susie: anthony, you mentioned apple. they do a great job on this kind of imaginative,
innovative retailing. and we know that amazon is the go-to place to get some good deals. what about social media, how is that responding to the changes going on in retailing? >> sure. a lot of innovative things specifically are being done with social media. for instance, kohl's, if you follow them on twitter, or like their facebook pages, they're offering deep incentives and discounts and running promotions for you, warning you to be involved in their -- rewarding you for being in their presence. if you download the wal-mart app, or sign up for e-mails, you'll be getting, also incentives, and only disownlt discounts to e people who download the apartments. apps. the idea is going to extend beyond black friday and into monday. which is a smart move on
their part. >> susie: with all of this technology at your fingertips, what does this mean for the future of retailing? why bother to go to a store and stand in line when you're a click away? >> i don't think the stores are ever going to go away. people really like to touch the product and see it, but we're going to see that trend continue, especially as people buy more electronics. it just makes the buying process easier, and it could potentially make it go longer over periods of time, and using black friday as the rallying cry to start it. >> susie: okay. it is very exciting, all of the changes that are coming to retailing. anthony pappas of pappas group. >> tom: shoppers are heading into the holiday weekend feeling the most confident they have in five years. the thomson-reuters, university of michigan consumer sentiment survey for november was up just a fraction from a month ago, but it continues trending higher. the pace of the increase slowed the same month as election day, and as talks over avoiding the fiscal cliff heated up in washington.
fewer americans filed for unemployment insurance for the first time last week. initial jobless claims fell by 41,000 as the impact of super- storm sandy on the job market began to ease. still, new claims remain over 400,000 thanks to the storm. on wall street: the dow closed up 48 points, the nasdaq added almost 10, and the s&p 500 finished higher by three. >> susie: stocks also rose on news of a ceasefire in the fighting between hamas and israel in the gaza strip. the announcement came after a week of rocket attacks and counter-attacks that has killed an estimated 150 people. most of the dead are palestinians. and just before that agreement to end hostilities, a bomb exploded in a tel aviv bus station injuring 27. >> tom: i don't wake up trying to solve for wall street, i wake up trying to solve for our members and customers each and every day. still ahead, we talk health care reform with florida's largest health insurer, chairman and
c.e.o. of florida blue, patrick gerahty joins us. >> tom: among the taxes scheduled to go up on new year's day if there is no solution to the fiscal cliff are taxes on dividends and capital gains. 403 of the 500 companies in the s&p 500 stock index now pay investors to hold their stock. that's the highest number since 1999. these companies paid shareholders a record $34 billion in cash in august alone. the threat of higher taxes on investments has hit stocks of traditional dividend payors, such as utility stocks. the sector exchange traded fund
has fallen to its lowest price utility company next era energy lew hay about the threat of higher taxes on dividends. >> it's going to affect investors, first and foremost, because the rate on dividends is scheduled to go from 15% to 43.8%. >> tom: that's the highest end possible. >> that's on the highest end possible. but that's almost a tripling of the tax rate. so the after-tax proceeds to investors will go way down. if that was it, maybe that would be okay. but it is even more than that. because with the higher tax rate on dividends and lack of parity between the rate on dividends and capital gains, a lot of investors will switch out of dividend-paying stock, so they'll sell. that will depress prices. and so investors will -- and it's not just people investing directly in stocks, anyone who invests
in a 401k, pension plan, life insurance, they're going to see the value of their investments go down. >> tom: is your main critic, lew, the difference between the scheduled tax increases on dividends, and those scheduled to take place on capital gains? >> the thing i'm pushing for, and frankly our whole industry, and most industries that pay large dividends are pushing for is that parity between capital gains and dividends. we don't want another situation where the government is picking winners and losers, if you will. and with the differential rate, people will switch from those dividend-paying stocks to other more tax-favored stocks or investments, whether it be stocks that pay capital gains or at kinds of investments. >> tom: if you go back prior to 2003, when the current tax structure for dividends and capital gains was put into place, companies still paid dividends, and shareholders still sought out dividends, and they
fluctuated, generally speaking, with the rest of the market. >> the biggest differs is since that point in time, the amount of dividends paid by companies have more than doubled. so with the lower tax rate on dividends, companies have stepped up the dividends that they paid at a rate higher than really their earnings growth has been, including companies that didn't pay dividends in the past. even apple now pays a dividend. dividends also show stability to investors, and i think most investors actually like the dividends. so -- and we also saw stock prices adjust when rates went down, and that was good for costumers. but a high tax rate on dividends is a high tax rate on investments. there is a general rule of thumb in economics: if you want more of something, you reduce taxes on it. if you want less of something, you tax it more. in our economy right now, with a lot of money sitting idle on the
sidelines, and a lot of people unemployed, the last thing we want to do is, you know, increase taxes on investments which will, therefore, result in less investments and less jobs. >> tom: we have more with lew hay tomorrow on our thanksgiving special, "looking at the fiscal cliff." >> susie: the thanksgiving holiday marks one of the busiest travel times of the year, and airlines are expected to have a blockbuster weekend. they could use it. the airlines have struggled to find profits over the past decade. sylvia hall reports.
>> reporter: it's one of the busiest days of the year for airlines, as people jet across the country to and from their holiday destinations. the airlines expect to fill a total of 24 million seats between today and sunday, according to airlines for america. that's an average of 2.5 million seats filled each day, up by a quarter of a million from last year. >> this year so far, the average profit point for every passenger is about $.50, which is awfully small. last year it was $.77. >> reporter: the holiday season is a welcome event in the industry's fourth quarter. >> historically, the fourth quarter was at best a break even quarter, but due to the airlines better management of their seat inventory, they can actually produce a profit during the fourth quarter, which i'm expecting. >> reporter: in recent years, industry representatives say airlines have struggled to survive, as their ticket sales failed to cover the volatile cost of fuel and their increased regulatory and tax burdens. to combat the problem, they have started selling fewer tickets to keep capacity down and control costs.
>> we're finding that more people still want to fly and unfortunately it means that planes are going to be a little more full than we'd like them to be but at this point, that's the only way that we're going to be profitable this year. >> reporter: analysts say the airlines do book heavier schedules than usual over the holidays, but these days they're also more careful not to overbook themselves that way they can avoid big trouble if bad weather slows them down. sylvia hall, "n.b.r.," washington. >> tom: states have just one month before they have to decide if they will start a health care insurance exchange. the exchanges are a key part of the health insurance reform law's efforts to expand the number of americans with coverage. we spoke with the head of the largest health insurer in florida, blue cross blue shield. patrick geraghty is the chairman and c.e.o. of florida blue. >> tom: pat, thank you for joining us tonight. will blue cross, blue shield participate if there is a health exchange
in the state of florida? >> we absolutely will. we will position our company to be part of any distribution channel that is out there. >> tom: how has enrollment been? >> enrollment -- it's not in the exchange yet, but enrollment in our company, we're over 83,000 new members this year, and we've got over 60,000 new members sold for 1/1/13. >> tom: how many of those new members have existing health insurance. how many are moving from uninsured to insured. >> almost all of those members have health insurance right now. we haven't seen the big movement from uninsured to insured happening yet. >> tom: in the past three years, florida has been number three in the united states, among states with the number of uninsured residents. what kind of impact has that had on health premiums for the insured in florida? >> it is pretty significant, actually. because the health system is required to treat those patients when they come through the emergency
rooms, which is typically where they will come, and that uncompensated care ends up being costs that get shift from the health system to the commercial plans that they have. it is a fairly significant shift, and we think the system will work better when everyone is covered. >> tom: as a percentage of an average premium, 10% extra they pay or 20% extra -- >> i think it is in that range, between 10% and 20%, additional costs. >> tom: the health exchanges, as you know, are designed with the goal of getting those uninsured into the market and broaden the market out. if there is successful, if there are more uninsured that go insured, will florida blue members see a rerequisite push down? >> we're talking about will that stem the tide of the inflationary cost in
health care. and there are a lot of other moving pieces here. the affordable care act has new revenue pieces like a tax on insurers, and a tax on manufacturers, we think that is not helping for affordable care. but they're offset by having more people in the pool. so the net washout of that and what it means for cost is yet to be determined. >> tom: the governor of florida, republican rick scott, has been a very vocal opponent of health insurance reform. a week ago, he sent a letter to the federal government, asking for a meeting writing, "current information available to us does not offer any information that an exchange lowers health costs." do you agree? >> i think in and of itself an exchange doesn't necessarily lower cost. the way that an exchange brings people into play is because that's where the federal government's subsidies are going to be applied. so you may be eligible for
insurance through an exchange, and if you're going to receive a subsidy, then someone who is uninsured receiving a subsidy would bring them into the covered pool. it doesn't lower costs to have an exchange in of itself. >> tom: patrick, thank you. patrick geraghty, chairman and florida blue is a non-profit health insurer. you can go online to nbr.com to hear more from c.e.o. patrick geraghty on if that is an answer to rising health insurance rates. >> susie: the latest attempt to save the twinkie has failed. hostess brands is moving forward with plans to liquidate after mediation talks between company executives, lenders and two workers unions didn't work out. hostess says too much time has passed and too much revenue lost for a recovery to be possible. the iconic snack food company employed more than 18,000 people.
an update on hewlett-packard's fraud claim. the federal bureau of investigation is opening an inquiry into the $8.8 billion dollar write-down, that h.p. says is a result of bad bookkeeping, at the u.k. software maker it bought last h.p.'s business has been struggling because of the shift away from personal computers, to tablets and smartphones. and the fbi may not be the only government agency eyeing the write-down, h.p. says its filed complaints with government agencies both here and in the u.k. and in the u.k. and you know, tom, this is just another board room drama at hewlett-packard. you remember the phone-hacking scandal, and the sexual harassment allegations, and they led to c.e.o. resignations. really amazing what is going on behind the scenes at hewlett-packard. despite all of that, the stock recovered a little bit today after that big selloff yesterday. >> tom: last night we were talking about how this stock hasn't traded as low as it was yesterday
since the mid-90s. a little bit of rebound today. here is susie in our market focus. the rebound kind of continuing for the broad market. with sachs drifting higher, and light holiday training. the s&p 500 hitting a two-week high by the close. after a choppy morning trade, word of the ceasefire between hamas and israel in the gaza strip at mid-day helped the index stay in positive territory through the closing bell. it ended higher by 0.2%. trading volume was light. just 520 million shares moving on the big board. 1.4 billion on the nasdaq. the telecommunications and energy sectors led the gains, up 0.6% each. technology rebounded some, up 0.4%. hewlett-packard remained in focus as the feds get involved in its claims it was duped by a company it bought. the stock saw twice its usual volume today as it bounced 2%. it hit more than a decade low yesterday after forecasting a disappointing outlook.
cloud-based software company sales-force led the technology rally, jumping 8.8% on strong volume. the rally takes salesforce to its highest price in two months. the company reported stronger than expected sales growth, growing revenue at a 30% clip year over year. and it's growing its deferred revenue, a sign of future sales. it wasn't such good news at agri-business giant deere and company. while the company said orders for farm machinery next year are off to a good start, higher costs ate into its earnings. the bottom line, deere earned a $1.75, much less than anticipated. in addition to higher costs, deere said its profits were pinched by a stronger u.s. dollar cutting into its international sales margins. shares fell 3.7%. volume quadrupled with the stock falling to a six week low. for next year, deere expects to see the strongest demand for its
equipment to come out of south america, driven by a booming commodity market there. we've seen a couple of beaten up mobile phone makers dial up signs of life in recent weeks, and they continued today. first, nokia. it was the most traded nasdaq listed stock today, rising 12.2%. shares are up 21% just since friday's close. it had been a heavily-shorted stock, meaning traders were betting on the price to drop. when those traders cover their positions, they have to buy shares, which can push the price up. in addition, nokia's newest lumia smart-phone has gotten a good reception with strong demand in some european markets. research in motion was up 5.7% today, bringing its gains since halloween to almost 30%. rimm is preparing to launch its newest blackberry device in the first quarter, after many months of missed deadlines. earlier in the program we spoke with utility boss lew hay about stock dividends and the possibility of higher taxes next year. gun-maker sturm, ruger and company will pay shareholders a special dividend of $4.50 per share before year's end. that news late yesterday pushed the stock up 3% today to its
highest price since may. the one-time payout will go to investors holding the stock as of december 7. there are new safety questions tonight involving leads made by st. jude medical for implantable heart defibrillators. leads are what connects the machine to the heart. shares fell 12.1%, dropping to a new 52 week low. an earlier version of the same leads were recalled last year. three of the five most actively traded exchange traded products were up. the financial e.t.f. was unchanged and the emerging markets fund slipped 0.2%. and that's tonight's "market focus."
>> susie: by now the turkey should be thawing and maybe even the table is set. but it's not just family that americans will be spending thanksgiving with. one in five of us will spend the holiday with co-workers according to a survey by job search website career-builder. it's not just because they will be working though, some will spend time with their colleagues outside of the office. workers in atlanta and dallas are most likely to spend the holiday with their colleagues. tomorrow on "n.b.r.," as we mentioned earlier, we have a thanksgiving special edition. on the fiscal cliff, those big spending cuts and tax hikes set to hit the u.s. economy on january 1, we examine whether congress and the white house can strike a deal to avoid going off the cliff. so be sure to join on us, we look at the impact of the cliff on jobs, how strategies for
investors, and tom talks with mark mobius, the global investing guru. that's "nightly business report" for wednesday, november 21. happy thanksgiving everyone, and hope you have a great holiday too tom. >> tom: goodnight susie, we'll see you online at: www.nbr.com and back here tomorrow night. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> join us anytime at nbr.com. there, you'll find full episodes of the program, complete show transcripts and all the market stats. also follows us on our facebook page at bizrpt. and on twitter @bizrpt.